Good afternoon, everyone, and welcome to First Solar's Third Quarter 2016 Earnings Call. This call is being webcast live on the Investors section of First Solar's website at firstsolar.com. At this time, all participants are in a listen-only mode. As a reminder, today's call is being recorded. I would now like to turn the call over to Steve Haymore from First Solar's Investor Relations. Mr. Haymore, you may begin.

Thank you. Good afternoon, everyone and thank you for joining us. Today, the company issued a press release announcing its financial results for the third quarter of 2016. A copy of the press release and the presentation are available on the Investors section of First Solar's website at firstsolar.com. With me today are Mark Widmar, Chief Executive Officer; and Alex Bradley, Chief Financial Officer. Mark will provide a business and technology update. Then Alex will discuss our third quarter financial results and provide updated guidance for 2016. We will then open up the call for questions. Most of the financial numbers reported and discussed on today's call are based on U.S. Generally Accepted Accounting Principles. In the few cases where we report non-GAAP measures such as free cash flow or non-GAAP EPS, we have reconciled the non-GAAP measures and the corresponding GAAP measures at the back of the presentation. Please note, this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statements contained in today's press release and presentation for a more complete description. It is now my pleasure to introduce Mark Widmar, Chief Executive Officer. Mark?

Thanks, Steve. Good afternoon, and thank you for joining us today. We had another good quarter of financial results in Q3 with net sales of $688 million and an earnings per share, excluding restructuring charges and a foreign tax benefit of $1.22. We continue to push forward on our technology roadmap with our best line efficiency exiting the third quarter, almost touching 17% at 16.9% efficiency. Our project execution was also strong as we continued construction on multiple utility-scale solar projects and continue to realize significant BoS savings. Despite the results of the past quarter, the rapidly evolving market pricing environment as shown on slide four, presents significant challenges to the upcoming year. While we will not be discussing our 2017 outlook on today's call, it is important to understand the dramatic pricing declines in the industry is currently experiencing and how we intend to respond. As we highlighted on our Q2 earnings call, we saw the module and PPA pricing environment at that time as increasingly aggressive and challenging. However, the impact of the lower second half 2016 installs in China were only just becoming evident. And the week since that call we have seen other module manufacturers continuing to bring online new capacity in the phase of the demand drop off in China. As a result of the oversupply and growing inventories, module pricing has declined at a dramatic rate in the third quarter. Since quarter end, there has been some signs of potential stabilization, as wafer and cell spot prices first leveled off, then increased slightly. In addition, module ASPs has leveled off perhaps finding a near-term floor as manufacturers clear inventory. As we said consistently and reiterated on our Q1 2016 earnings call, when an oversupply situation exists, our strategy is to take a disciplined approach…

Thanks Mark. Before going into the quarter results I want to express my excitement at the opportunity to take on the role of CFO at First Solar. Since I joined the company in 2008, the solar industry has changed enormously and it continues to evolve at a rapid pace. First Solar's unique technology advantages and financial strength position the company for long-term success. And I look forward to the opportunities that lie ahead for us. Turning to the quarter, I'll start from slide 11 with some operational highlights. We produced 779 megawatts DC in the third quarter, a decrease of 1% from the prior quarter. The slight decrease is due to an increase in upgrade activities across the fleet, partially offset by higher fleet efficiency. Relative to the third quarter of 2015, production was 19% higher as a result of higher module efficiency, increased capacity utilization and the addition of new capacity. Factory capacity utilization was 97% in Q3, a decrease of three percentage points from the prior quarter. The lower utilization was also a result of the increase in fleet upgrade activities. And as compared to the third quarter of 2015 capacity utilization increased by three percentage points. Fleet average module conversion efficiency increased to 16.5%, a 30 basis point increase quarter-over-quarter and a 70 basis point increase year-over-year. Module conversion efficiency on our best line averaged 16.6% in Q3. As Mark noted, our lead line exited the quarter at 16.9%, highlighting the impact of recent improvement programs deployed. Next on slide 12, I'll discuss the P&L results for the third quarter. Net sales were $688 million, a decrease of $246 million compared to the prior quarter. The sales decrease resulted from lower systems revenue recognition on our Astoria, Silver State South, Kingbird and other projects. The lower systems…

Thank you, sir. We'll take our first question from Colin Rusch with Oppenheimer. Colin Rusch - Oppenheimer & Co., Inc. (Broker): It seems like what you're intending to say is that as you go through this decision making process that you may just skip over the Gen 5 and go straight to Gen 6. With this call only a couple of weeks away, what can you tell us about the final decision that you're trying to make at this point, as we try to get a sense of where we're going to come out in a couple of weeks on this guidance?

So, Colin, what we've done here and we engaged, probably, I guess, maybe four weeks to six weeks ago, I think it is. We put two tiger teams together, if you want to use that term, to do somewhat of a bake-off – right – to look at both Series 5 and Series 6 and what is the art of the possible and what can we do to further reduce the cost on Series 5 as well as trying to find a path to what can we do to try to accelerate the timing of Series 6. Our long-term plan has always been to have the two products coexist. But given the current market environment, we're reevaluating that and we're trying to make a decision that if we can get the cost profile of Series 5 down to a level, which we think it needs to be to give us acceptable margins on the sale of that product then we'll move forward with that transition. If we're not able to do that, we may look to move straight into a Series 6 platform with a view of trying to put one product forward as quickly as possible. We have been having ongoing discussions with our internal teams. We've had ongoing discussions with subcommittees within our board and we'll have our final review with the board next week and we'll make a decision from there. And whatever that decision is, we'll make sure that we communicate that to everyone on the earnings call on the 16.

And we'll take our next question from Tyler Frank with Robert W. Baird. Tyler Charles Frank - Robert W. Baird & Co., Inc. (Private Wealth Management): Hi, guys. Thanks for taking the question. A couple of large utilities including Southern Company and NextEra recently announced that they were going to limit their spending on solar projects. They were going to focus more on other renewables including wind going forward. Can you discuss how that might impact things and sort of what you're seeing for the utility-scale landscape right now including the competitive environment?

Yeah, so I think NextEra and Southern have both announced that based on how they view the economics and risk reward of solar projects they're going to perhaps reduce spending in solar and look more at wind. I think that neither of them has said that they're going to be exiting solar market and we clearly have good relationships with both of those two counterparties. They'll still be looking for high quality assets. And I think we're both – we're well positioned to meet those opportunities. What we have seen clearly in the latter half of 2016 and going into 2017 is there is somewhat of a scarcity of tax capacity for large utility-scale assets. That being said, given the ITC extension timing, there's also a dearth of assets going into 2017. So we think the two have somewhat balanced out, although there may be a little challenging tax capacity issues at some point. The other thing I would say is that we feel that we bring extremely high quality projects to market. And given both the quality of the projects, the development and the relationships we have with counterparties in the market, we don't see a significant constraint today for us in finding buyers and tax capacity for our assets. It may be that further down the chain there are some people who are struggling but we're still not seeing that reflected in our markets today.

And we'll take our next question from Vishal Shah with Deutsche Bank.

Hi. Thanks for taking my question. I wanted to just better understand what kind of component margins would be acceptable assuming you're able to lower your cost for Series 5 or maybe even Series 6 when you guys start ramping? I don't assume that you're going to get back to the 25%, 26% levels that you've seen in the past. And then, can you maybe talk about, Q4 – is your revenue outlook for Q4 mostly all component shipments or are you also assuming some systems? Thank you.

In terms of on the margin profile for our component module sales, in our view our entitlement still should be in that 20% range. There is no reason to believe that we shouldn't be able to achieve those types of margins. And what we need to make sure is that we can deliver that with a Series 5 product and that's what we're working on, trying to get the cost down to a point where we think we'll clear the market on the ASP and still be able to deliver margins that are in that range. Our expectation is that a Series 6 product will deliver even better margins than that. So I wouldn't want to change our view of the long-term expectations around gross margin for our module-only sales. With our Series 4 product today, given the smaller form factor, it will make it in today's pricing environment more challenging to achieve those types of margins and we would obviously most likely see margins much lower than the 20%. That's what precipitates the need to transition to either Series 5 or Series 6 to normalize the form factor delta that we have today in the marketplace and generally drives a slightly lower value for the product. As it relates to Q4 and our mix of revenue, there is still some systems revenue in the fourth quarter. But you will see a significantly high proportion of that being module-only sales.

We'll take our next question from Philip Shen with ROTH Capital Partners.

Hey, guys. Thanks for the question. In the recent past, you've talked about a 3 gigawatt year for 2017, 2 gigawatts for external modules and 1 gigawatt for systems. I know you have your call coming up and so forth, but you have talked about this in the past. With California Flats and Moapa slated for 2017 now, that brings in more than 500 megawatts of systems to 2017. So how should we be thinking about volumes now for 2017? Is it more of a 3.5 gigawatt target?

Yeah, so I think we'll discuss capacity on the call in a couple of weeks. As it relates to both Moapa and Cal Flats, we'll be completing the sales of those assets in 2017 but a significant portion of the modules have shipped in 2016. When you look to the 2017 shipment numbers that we discussed previously of approximately 3 gigawatts – split gigawatt systems, 2 gigawatt modules. The total capacity we'll discuss again in a couple of weeks. If you look at the systems business today, we've booked approximately 550 megawatts of systems shipments into 2017 today. We have about another 100 megawatts of relatively late-stage opportunities that takes us to between 600 megawatts and 700 megawatts. Beyond that, we have seen some opportunities to pull out of that pipeline. So asked Mark mentioned in his comments earlier in Egypt, we've seen some opportunities go by the wayside there based on development issues. And likewise, we've passed on some opportunities in India and Africa based on pricing where we won't chase the pricing to the bottom and we won't go into deals that are uneconomic for us. So if you look at 2017 today, I think we're confident in a 600 megawatt to 700 megawatt number in terms of shipments, which is less than we hoped for, but we also continue to have a robust pipeline and continue to look for other opportunities.

We will take our next question from Paul Coster with JPMorgan.

Yes, thanks for taking my question. I know that, well, just over 500 megawatts of Moapa and California Flats are shifting into 2017. And it looks like that seems to be the main reason for what – a 700 basis point increase in margin – gross margin in 2016, that's for the full year. I mean, I haven't done the math yet, but the implied gross margin on those projects must be very low, arguably in the single-digits. Am I correct and what does this mean for 2017 gross margin?

Yeah, so what I would say is there are two things impacting that margin. One is we've had good execution on projects this year, so we've had some project cost savings that have pushed the numbers higher than expected. The other piece – the two assets we're referencing, both Moapa and Cal Flats, are legacy assets that had some unique challenges to them that made them lower gross margins than you would otherwise see on our typical systems business. The Moapa is an asset that we acquired in late-stage development and therefore paid a development premium to acquire. On Cal Flats, we have one discrete development issue which if resolved, would increase that margin significantly but that's not currently in the guidance numbers. So those two assets have some unique differences from what I would say is a typical development project. If you look out into 2017, we don't have I think significant, similar challenges on the assets that we have in 2017. And then going out beyond that, the majority of our California pipeline out to 2018 and 2019 is at higher margin levels that we think are more expected and accessible for a systems development business.

We'll take our next question from Julien Dumoulin-Smith, UBS.

Hi, good afternoon. Can you go into a little bit more detail on Stateline recognition here just in terms of the project sale process with Kathy (37:30)? You said you assumed a certain percentage. Can you elaborate a little bit, A, what that percentage is; and B, what the nuances around where that will come out? And what that upside could be or at least give some parameters around what that upside could be?

Julien, as you know, 8point3 has gone out and recently done an equity raise plus they've also expanded their credit agreement. They had an accordion feature underneath the credit agreement, which they expanded that; I think the capacity was around $250 million. They've also recently acquired Henrietta, and so they've used some of the capacity for that. So what we are trying to do with 8point3 is there is limited capacity in terms of their ability to acquire the entire interest. Clearly there is an interest from 8point3 to do that. We are trying to work through structuring around that to see if we can accomplish that. And to the extent that we can then we will be able to sell 100% of our remaining interest, which was 34% of Stateline. We have left out of the guidance approximately 25% of the value, which is depending upon our ability to go above and beyond or find ways to sell 100% even though there is not today presently sufficient capacity to acquire 100% interest in Stateline given the available cash and debt capacity that 8point3 has at this point in time. So we're just looking through options, so in our guidance we've excluded a portion of the sale and that's about 25% of the remaining interest.

We'll take our next question from Brian Lee with Goldman Sachs. Brian Lee - Goldman Sachs & Co.: Hey, guys. Thanks for taking the questions. Just had a couple. First on California Flats, what sort of timing should we expect in 2017? And then given the EPS range is basically unchanged here with a few of the benefits from other lines, I back into about $0.80 of EPS at the midpoint that Cal Flats and Moapa represented. Is that reasonable and would it change now that you're monetizing those assets later? And then just quickly on the updated guidance for 2016, the non-GAAP tax rate, could you reconcile what exactly is driving the $0.40 of EPS relative to your prior guidance? Thanks.

So, I guess, Brian, on the tax rate, I think what you're seeing is the delta between the GAAP and the non-GAAP, first off is we highlighted that we had a favorable ruling on an item in an international jurisdiction, which was worth about $35 million or about $0.35. That is in our GAAP numbers but that's not reflected in our non-GAAP numbers. So that's kind of our primary delta between the two. The other side of it is relative to our prior outlook on the tax rate, we have a favorable mix of income. So what's happened now with the drop in revenue that drives a different result in terms of where is the income by jurisdictional mix, which each jurisdictional mix had a different tax rate associated with it. And as you know, we have a tax holiday in Malaysia, so more of the income that's represented in Malaysia as a percent of the total will drive down the overall tax rate. So that's kind of the events that are driving the change in the tax rate both on a GAAP and a non-GAAP basis from the prior guidance that we provided in Q2 earnings call. Brian, I'm not really sure how you're getting the $0.80 or so for Moapa and CA Flats. I think Paul had it right when – and he referenced it; when you look at the revenue delta, which was close to $1 billion, and if you look at the gross margin rate increasing, but when you look at the total gross margin dollars not changing significantly, you would look to it and say, well, that would imply that the gross margin on both of those assets is lower than normally expected for a systems business. I think Alex walked through that as well. So we can take that off-line if you like. We can spend more time with you, but you should not be getting anywhere close to, I think you referenced round $0.80 of value for the push out of those two projects. It will be significantly lower than that.

We'll take our next question from Sophie Karp with Guggenheim.

Good evening. And thank you for taking my questions. I was wondering if you could give us some sense with your expanding O&M portfolio, what are the economics of those contracts? What do they look like and how should we think about the contribution of that type of business going forward?

So the O&M business, again it's a good business, it's a recurring annuity stream, relatively high fixed cost, therefore, variable volume flows through at a very high contribution rate. And the profile on the business if you look at it over time, the margins can range – the margins on average are above the average for the business. They also will be much higher, let's say, in the first five or six years of the contract. So if you look at the performance of the plan as well as the warrantees that you have with the inverter manufacturers and others, you will generally realize much higher margins within the first five to seven years. And then as you approach 10 years to 15 years you may see margins start to drop off a little bit, especially if you have to do overhaul – inverter overhaul maintenance and those types of things. But it's a good margin business. It's one that is really based off of scale and we are looking to – we have a strong presence here in the U.S. We are looking to grow it and capture the benefit of the infrastructure through our network operating center and other investments that we've made over the years to monitor plants and try to find other ways to optimize the performance of the plants. It's a good base business that has great opportunity to continue to grow. The revenue dollars won't be sizable in general relative to the total, but they can contribute meaningful gross margin and EPS.

We'll take our next question from Krish Sankar with Bank of America.

Yes. Hi, thanks for taking my question. Mark, I had like a longer-term question. Three months ago you guys spoke about Series 5 being probably 1 gigawatt in 2017 and then as the module price continued to decline 15%, it forced you to rethink the strategy. I'm kind of curious if module price continues to decline another 25% to 30% over the next 12 months or 18 months, would Series 6 be highly profitable and what are the levels you have for lowering your overall cost at this point?

So a couple things, around Series 5 in particular is that what we are focused on Series 5, and I want to make sure it's clear, is that if we can further cost reduce it, and we're looking at ways to do that, the product will be highly competitive. So I don't want it to be looked upon as that it's a direct correlation that the ASPs have declined and therefore the product is no longer competitive. It is an advantaged product relative to Series 4 because it solves our difference in form factor which drives – generally drives a higher balance of plant cost. So it's a very valuable product from that standpoint. The challenge though is getting, so that there is some incremental costs that we are adding to the module and in terms of back rails and other things along those lines. So it can drive to a higher cost point than Series 4, but the general benefits of the larger form factor is offsetting the impact of that higher cost. What we're trying to find a way is that can we further cost reduce some of the incremental components for Series 5 or just the bill of material or other ways of driving out cost on Series 5 that we can get it to a position that we feel more comfortable in competing in the marketplace and capturing the margin profile that we would like. The other thing I think that's important to understand is that if – when we first embarked around our vision for Series 6, it was a little over a year ago. And we have had tremendous learnings around Series 6 that have dealt with some of the potential constraints or challenges/risk that we had with Series 6, when we first sat…

And, ladies and gentlemen, we'll take our final question from Pavel Molchanov with Raymond James. Pavel S. Molchanov - Raymond James & Associates, Inc.: Thanks for taking the question, guys. Back in April, at the analyst day, you talked about the price advantage that you can get in hot climate areas such as India. With the module pricing meltdown since then industry-wide, have you been able to retain that advantage in the hot climates or has that kind of dissipated away?

No. Look, the inherent energy value and the benefits are there, and we are able to capture that. India is a great market for our product and one that we can capture meaningful incremental value for the energy that we provide. So there's nothing has changed, the ASP environment doesn't change that. What has some impact, not necessarily around percent energy advantage, but the value of the energy can be impacted with PPA prices. So it's intuitive, the lower the PPA price therefore the lower the value of the energy. So there is some impact of that as PPA prices in some markets have gotten very aggressive. But the inherent energy value is still there. The percent deltas are still there. The only real dynamic that can change the equation around what does it translate into ASP is what is the underlying PPA and generally lower PPA means less value in the ASP.

And ladies and gentlemen, that does conclude today's conference. We appreciate your participation.